Oral Answers to Questions
Maria Eagle Excerpts(1 week ago)
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The Minister for Defence Procurement and Industry (Maria Eagle)
This Government are getting on with delivering for defence to make Britain secure at home and strong abroad. The UK remains a leading voice in NATO on missile defence, which we see as a cross-Government and international effort. We are working to enhance our missile defence capabilities, and modernising our approach to air and missile defence, both for our own forces and with our NATO allies.
Lucy Rigby
At last month’s NATO Ministers of Defence meeting the Secretary of State agreed to step up co-operation with our NATO allies on missile defence and cutting-edge long-range missiles. Does the Minister agree that a focus on integrating NATO’s missile defence is key to strengthening European security?
Maria Eagle
Yes, I do. Defence against air and missile threats has played a key role in our recent thinking, and with our NATO-first approach to policy, putting integration with our allies at the heart of our defence plans makes sense and is a vital part of ensuring our security going forward.
Sir Roger Gale (Herne Bay and Sandwich) (Con)
Will the United Kingdom, preferably in tandem with our European colleagues but if necessary bilaterally with the United States, align with the United States in permitting Ukraine to use the missile defence systems that we have supplied as it sees fit in its own defence?
Maria Eagle
Absolutely. We intend to align with our allies in making sure that Ukraine can make use of the capability that has been offered by those who have committed support to that country in its fight.
Adam Jogee (Newcastle-under-Lyme) (Lab)
Jeremy Corbyn (Islington North) (Ind)
The Minister for Defence Procurement and Industry (Maria Eagle)
We recognise the serious risks posed by the use of nuclear weapons. It was a Labour Prime Minister who signed the non-proliferation treaty in 1968. The UK remains fully committed to the multilateral non-proliferation aim of a world without nuclear weapons. We also have a triple lock commitment on our nuclear deterrent, which is a vital part of UK defence and deterrence.
Jeremy Corbyn
According to the Nuclear Information Service, there have been 110 historical incidents involving UK nuclear weapons. There have been 25 well-recorded near misses between the United States and Russia—and, formerly, the Soviet Union. In that context, will the Minister explain why, on 1 November, when the United National General Assembly was invited to vote on establishing a panel for a scientific study on the effects of nuclear weapons, Britain, Russia and France were the only three countries to vote against its establishment? Fortunately, the committee was established. Will the Minister assure the House that Britain will fully co-operate in examining the devastating effect of nuclear weapons were they ever to be used?
Maria Eagle
The UK has always recognised the possible humanitarian consequences of the use of nuclear weapons. The proposed panel does not establish a clear mandate to address maintaining long-held knowledge of the devastating consequences of nuclear war using scientific research, and the resolution will not advance progress towards nuclear disarmament. That is why we voted against it.
Rebecca Long Bailey (Salford) (Ind)
The Secretary of State’s commitment to nuclear testing veterans is well known, but he may be concerned by a report in the Daily Mirror today claiming that incorrect testimony and incomplete documentation were provided by civil servants and given to judges in the court cases brought by the nuclear veterans over decades. Will the Secretary of State investigate those claims urgently and report to the House?
Maria Eagle
I can assure the hon. Lady that my hon. Friend the Minister for Veterans and People has met nuclear test veterans to establish a new relationship to ensure that we have consistent and productive dialogue. I know that he is committed to exploring the concerns raised about access to medical records, and I am sure that progress will be made in that context.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Alan Strickland (Newton Aycliffe and Spennymoor) (Lab)
The Minister for Defence Procurement and Industry (Maria Eagle)
The MOD will continue to invest in the company’s people to ensure that the facility has a sustainable future. Octric’s leadership team is currently finalising its future resource plan, which will cover the need for new high-tech roles such as engineers and scientists to ensure that the facility is best placed to develop new technology and meet defence needs. I am more than happy to meet my hon. Friend about that.
Katie Lam (Weald of Kent) (Con)
Maria Eagle
I will be pleased to meet the Father of the House and look at those plans. I think it was my sister who made that decision in the Home Office—[Laughter.]
Louise Jones (North East Derbyshire) (Lab)
I served in Germany for two years as part of NATO’s very high readiness joint task force, and I welcome the improved co-operation with that nation. I also saw at first hand the importance of our relationship with Poland. Can the Secretary of State tell me what we are doing to improve co-operation with that nation?
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
In the UK we have some very special skills when it comes to developing future defence equipment. To lose those skills would be a desperate business. Does the Secretary of State agree that co-operating and working with our friends in Europe is one way to preserve them?
Maria Eagle
The hon. Gentleman is correct. There are increasing examples of industry working across our European nations, both in the EU with our improving relationships on defence and in NATO. That is one way in which we can ensure that the skills are available to make the equipment that we need.
Steve Yemm (Mansfield) (Lab)
Due to a lack of funding, many reservists in my constituency are not getting the training days they need and are therefore not receiving the salary that they had anticipated. That means that many highly trained and committed reservists have no choice but to leave and join another career. Will the Minister outline what the Labour Government will do to support our reservists, including those who live in my constituency, all of whom are a vital part of our armed forces?
Martin Wrigley (Newton Abbot) (LD)
Small and medium-sized enterprises in my constituency tell me that research and development funding has dried up since last December. What hope can the Minister offer to ensure that SMEs continue their vital innovation to keep the UK safe, and to help them turn their swords into ploughshares?
Maria Eagle
The hon. Gentleman is right to highlight the importance of SMEs in improving our industrial base and bringing agility and new ideas to our defence industrial production. He can be assured that there will be SME involvement in our industrial strategy to the extent that it is possible. We intend to make sure that SMEs, not just the primes, get a better in at the MOD and are able to get the work.
Chris Bloore (Redditch) (Lab)
Will the Minister join me in congratulating the Royal British Legion for another highly successful poppy appeal, and the Redditch and Astwood Bank Royal British Legion for another record-breaking year?
BAE Systems Barrow Incident
Maria Eagle Excerpts(3 weeks, 5 days ago)
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The Minister for Defence Procurement and Industry (Maria Eagle)
On 30 October 2024, there was a fire in a submarine construction facility, the Devonshire Dock Hall (DDH) at the submarine build yard run by BAE Systems in Barrow-in-Furness.
The fire started shortly after midnight on Wednesday morning. BAE Systems implemented its emergency response plan, which moved fully to the recovery phase at 1 pm the same day. I can confirm that at no point was there any nuclear risk from this fire.
Seven BAE Systems personnel were taken to hospital following the initial fire as a precautionary measure and all have now been released.
Once the area has been made safe a formal fire investigation will take place to establish the root cause of the fire and the extent of the damage. Until this occurs it is too soon to give a precise assessment of what, if any, impact there will be on any BAE Systems capabilities or submarine build projects. Ministers continue to engage closely with BAE Systems.
Barrow is the historic home of submarine building in the UK and this Government are committed to delivering the plan for Barrow, creating economic opportunity and delivering the nuclear deterrent as part of our national endeavour.
I would like to make a special mention of the emergency services, including those of BAE Systems and Cumbria, whose professionalism and highly effective response safe- guarded the local population and helped put this fire out.
[HCWS176]
Oral Answers to Questions
Maria Eagle Excerpts(6 months, 1 week ago)
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Maria Eagle (Garston and Halewood) (Lab)
First, I thank the Minister for Defence People and Families for inviting me to visit the defence serious crime unit, which I did last Thursday. The people there are obviously doing good work focused on tackling serious sexual and violent crimes in the armed forces. Given the doubling of reports of bullying, discrimination and harassment in the Ministry of Defence since 2019, and some cases remaining unresolved for up to three years, what is the Minister doing to address the toxic culture in his Department? Why is it that such things seem to be worsening on this Government’s watch?
Dr Murrison
I think the right hon. Lady would have to admit that a lot has been done over the past two or three years, including the setting up of the defence serious crime unit and the defence victim witness care unit. They are important. The general message has been that we have a zero-tolerance approach. It has been, “Come forward. You will be listened to and taken seriously.” It is reasonable to assume that some of the figures are the result of people now having the confidence to come forward, because their complaints will be investigated independently. Previously, that was not the case.
Defence
Maria Eagle Excerpts(6 months, 3 weeks ago)
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Maria Eagle (Garston and Halewood) (Lab)
May I begin by welcoming the debate? As the hon. Members for Harwich and North Essex (Sir Bernard Jenkin) and for North Wiltshire (James Gray) said, we used to have more of these debates, but it is very good we have had one in Government time. While the right hon. Member for New Forest East (Sir Julian Lewis) said we are down to the usual suspects, it still has been a high-quality debate. There were excellent speeches from the Labour Benches by my hon. Friend the Member for Halton (Derek Twigg) and by my right hon. Friends the Members for Warley (John Spellar) and for North Durham (Mr Jones); from the Government Benches by the right hon. Members for Horsham (Sir Jeremy Quin), for Rayleigh and Wickford (Mr Francois) and for New Forest East, and the hon. Members for Harwich and North Essex, for North Wiltshire, for Filton and Bradley Stoke (Jack Lopresti), for Bracknell (James Sunderland) and for Isle of Wight (Bob Seely); and from other Opposition parties by the hon. Members for Strangford (Jim Shannon) and for Tiverton and Honiton (Richard Foord). It has been an excellent debate.
The first duty of any Government is to keep the nation safe and protect our citizens. From deployments abroad and the response to the invasion of Ukraine to deployments at home during the covid-19 pandemic, our armed forces are essential to our national defence, our national resilience and meeting our NATO obligations. Labour is deeply proud of our armed forces personnel, veterans and their families, and of the contribution that they make to our country. Theirs is the ultimate public service, and their professionalism and bravery are rightly respected across the world. We thank them.
Labour is committed to strengthening our national defences and supporting our armed forces. Strong national defence is a secure foundation upon which Labour’s mission-driven Government will be built if we are fortunate enough to win the general election when it comes.
Labour’s commitment to NATO is unshakeable. We are the party of NATO and Labour’s values of democracy, freedom and peace are embedded in its founding treaty. Article 5 is the cornerstone of Labour’s commitment to Britain’s security. Labour’s support for nuclear deterrence is total. We will upgrade the UK’s deterrent and build the new submarines needed at Barrow. We believe that defence procurement can strengthen UK sovereignty, security and economic growth.
There has been much talk about the commitment to 2.5% of GDP, so I wish to make it clear that Labour is totally committed to 2.5%. In fact, the last time defence spending was at 2.5% was under a Labour Government in 2010. The current Conservative Government have cut defence spending. It has never been 2.5% in any of the past 14 years of Tory Government and we have seen the Army cut to its smallest size since Napoleon. My right hon. Friends the Members for Warley and for North Durham and my hon. Friend the Member for Halton made those points very well in their contributions.
Labour will always do what is needed to defend Britain and we will always spend what is necessary to deal with the threats that we face. That is why we are committed to getting back to 2.5% as soon as we can in a responsible way. We will set out a credible plan to do so if we win the general election. It is why we will hold a strategic defence and security review if we do get into government to look properly at the threats that we face and at what we are already spending. It is simply not credible to claim, as the Government do, that it can be done by firing 72,000 civil servants, as the Secretary of State set out. The last time that this Government promised to make their defence plans add up by firing MOD civil servants in 2015, the number of civil servants in the MOD increased, so it is hardly credible now to claim that that will do the job.
In his opening remarks, my right hon. Friend the shadow Defence Secretary said that people will judge the Government on what they do, not on what they say, and that is absolutely right. My right hon. Friend the Member for North Durham said that the Government’s promises were all smoke and mirrors and soundbites for the next general election, and it is hard to see them as anything else when they have been left so late in this Parliament to be announced.
The Institute for Government has said that the Government’s plan does not add up and is not credible. It says that cutting 70,000 civil service jobs will get nowhere near close to delivering the savings needed and that, even when using our research and development budgets as well, it will leave questions about how the rest will be paid for. The House welcomed the right hon. Member for Rayleigh and Wickford saying that the Defence Committee—the Chair of which is also in his place—will be scrutinising the £75 billion figure. I look forward to hearing what it has to say when it has done so.
The truth is that the Conservatives have failed on defence over the past 14 years. They have cut spending and they are still doing so. They have hollowed out our armed forces. Since 2010, the Conservatives have reduced our armed forces by more than 43,000 personnel, one in five ships has been removed from the Royal Navy, and more than 200 aircraft have been taken out of service in the past five years alone. They have cut the British Army to its smallest size since Napoleon, while the threats are increasing and NATO is boosting its high-readiness forces from 40,000 to 300,000. Ministers now plan to cut the Army further. Those are the facts.
Recruitment targets have been missed every year, so the Government have not even been able to recruit the numbers they want, and retention rates are dropping. My hon. Friend the Member for Halton referred in his remarks to the “outflow” and the state of reserve forces in respect of some research that he has been doing into the numbers. Therefore, the past 14 years have corroded the nation’s contract with those who serve, and we must do better. The Government have left personnel living in damp and mouldy housing and, perhaps not surprisingly, morale has fallen, as has retention. Is it any wonder, when we leave people living in the conditions that we have seen in some of our forces accommodation? Nearly half of all serving personnel live in the lowest grade single-living accommodation and more than 4,000 personnel live in accommodation so poor that the MOD is forced to reduce or scrap collecting rent altogether. Contractors hired by Ministers missed 21,000 maintenance appointments between April 2022 and February 2024.
The report of the independent Kerslake commission on armed forces housing entitled “Homes unfit for heroes” has called the state of forces housing
“a tax on the goodwill of service personnel and their families.”
During the cost of living crisis, the numbers of personnel and veterans on universal credit are rising, and some troops are even using food banks to get by.
In government, Labour will renew the country’s commitment to those who serve, set new standards for service accommodation and legislate for an armed forces commissioner to act as a strong independent champion for our forces and their families to improve service life. We will fully incorporate the armed forces covenant into law, fulfilling the moral contract that our society makes with those who serve. I noticed that the hon. Member for West Dunbartonshire (Martin Docherty-Hughes), who speaks for the SNP, said that he wanted a representative body but was willing to support some of Labour’s proposed policies.
On procurement, the Conservatives have wasted over £15 billion of taxpayers’ money through mismanagement of defence procurement programmes, with over £5 billion wasted since 2019 alone. Forty-six of 52 major projects are not on time or not on budget. Ajax was supposed to be in service in 2017, and £4 billion has been spent so far, but there are no deployed vehicles and it will not be in service until the next decade. It is no wonder the Secretary of State is not listening and is too busy chatting—he does not want to hear about the failures of defence procurement on his watch, or the Government’s cost-saving cuts to E-7 Wedgetail, which are cutting the number of planes from five to three, with taxpayers footing 90% of the original cost to get only 60% of the planned capability.
Mr Francois
I am very critical of Wedgetail, but, just as a fact, on Ajax, the initial operating capability for the first vehicles is at the back end of 2025. That is next year, not in the next decade.
Maria Eagle
I accept that fact. If I said the next decade, that was not what I meant to say.
The Public Accounts Committee has described the defence procurement system as
“broken and repeatedly wasting…taxpayers’ money.”
My right hon. Friend the Member for Warley was right that we need an industrial base and that short-term cost cutting will not do. He said that we need to speed up procurement, especially of administration, when it comes to making these decisions.
The right hon. Member for Rayleigh and Wickford said that we need a change of culture as well as reform in procurement, as did the hon. Member for Harwich and North Essex, who set out his ideas about how best to change culture in organisations that can be quite resistant to change. I accept that that will be a difficult job, but I think there is acceptance across the House that it needs to be done.
At the moment, it is fair to say that the Government have been wasting taxpayers’ money hand over fist, and that is not just waste in procurement. Parliamentary answers show that the Department has lost £927 million to fraud since 2010, with £619 million of that since 2019—that would be enough to pay for 170 Challenger 3 tanks—yet the average length of time for Fraud Defence to conduct an investigation has increased from 519 days in 2019 to 742 days in 2023. Why? The Government seem to have stopped focusing on good administration.
A Labour Government will do better. Under a future Labour Government, we will drive deep defence procurement reform inside the MOD to reduce waste and ensure that our armed forces have the kit they need to defend Britain.
Labour is committed to strengthening our national defence and supporting our armed forces and their families. We will always do what is necessary to defend the country, and we will always spend what is necessary to deal with the threats that we face. Britain will be better defended under Labour.
Oral Answers to Questions
Maria Eagle Excerpts(8 months ago)
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Maria Eagle (Garston and Halewood) (Lab)
Defence procurement can strengthen UK sovereignty, security and economic growth. We on the Opposition Benches believe that defence investment should be directed first to UK businesses, so that we make, buy and sell more in Britain. With that in mind, what steps is the Minister taking in his rapid review to ensure that social value considerations properly take into account the huge advantages to the UK economy of awarding more contracts to British businesses, so that we create more defence jobs here in the UK? That does not seem to happen at present.
James Cartlidge
I think there is considerable consensus, because I agree with the right hon. Lady about the importance of sovereign defence capability, and not just because of the economic benefits, although those are crucial. As we enter this era, which has been described as pre-war, it is vital that we have a UK sovereign industrial base. As the Ukrainians have learned, there are certain skills and capabilities that we will need in country, should we get to a hotter military situation, and that is why that is such a priority for us.
Maria Eagle (Garston and Halewood) (Lab)
As the former Defence Secretary, the right hon. Member for Wyre and Preston North (Mr Wallace), told the House last January, the Government have “hollowed out and underfunded” the UK military over the last 14 years. That is in large part due to their total failure on armed forces recruitment, and damning new figures show that over the last decade, 800,000 people who were willing to serve and defend their country simply gave up and withdrew their application. The current Defence Secretary says that the recruitment system is “ludicrous”, and the organisation running it got called the wrong name by the right hon. Member for Rayleigh and Wickford (Mr Francois), but where is the plan to fix this? It is not working.
James Heappey
The right hon. Lady is conflating two separate issues. The former Secretary of State for Defence and I, and everybody else who has served on the Government Front Bench since we have returned to the prospect of state-on-state war, have referred to a hollowing out of the force. That is a consequence of decisions made not just by this Government, but by Governments since the fall of the Berlin wall, because the force that we maintained for the cold war and all its enablement was not necessary when we were fighting counter-insurgency campaigns in Iraq and Afghanistan. That is what is meant by hollowing out. The sooner the right hon. Lady starts to deal with that issue, rather than conflating it with others to make political points, the sooner she will start to contribute to an important debate.
As far as recruitment goes, record interest has been shown in joining our nation’s armed forces, and there is no hiding from the fact that we need to rapidly accelerate the time between expressing an interest and being in training.
Draft Single Source Contract (Amendment) Regulations 2024
Maria Eagle Excerpts(8 months, 3 weeks ago)
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The Minister for Defence Procurement (James Cartlidge)
I beg to move,
That the Committee has considered the draft Single Source Contract (Amendment) Regulations 2024.
It is a pleasure to see you in the Chair, Mrs Murray. There is a lot of tension in Westminster today—possibly not on this item, but it is very important none the less.
The Ministry of Defence’s preferred approach to procurement remains through open competition in the domestic and global markets, but we are often limited to a single supplier to provide the capabilities that our armed forces need, particularly when we have to procure equipment quickly, in the face of rapidly evolving threats. We also need to preserve key industrial and technological capabilities within the UK, for strategic reasons. The combination of those factors means that single source procurement amounts to about 50% of defence procurement spend on equipment and services, or some £13 billion per year.
Where there is a lack of competitive pressure, the MOD needs alternative ways of assuring value for money for the taxpayer, while ensuring that our suppliers are paid the fair returns required to preserve their long-term viability. Like many countries, the UK Government use a statutory framework, introduced through the Defence Reform Act 2014 and the attendant Single Source Contract Regulations 2014. These set out clear rules on pricing single source defence contracts, which place the onus on suppliers to demonstrate that their costs are appropriate, attributable and reasonable, and they define the level of profit that can be applied. Where there is a dispute about the price, either party can make a referral on the matter to the impartial Single Source Regulations Office for a legally binding decision.
Since their introduction in 2014, the single source contract regulations have generally worked well and have helped to ensure that the prices paid for single source contracts are reasonable. Under the regime, there are now some 575 contracts, with a total value of more than £90 billion. However, any set of regulations needs to adapt as the environment changes. In this case, we have found that the rules continue to work well for traditional defence procurement—for ships, submarines, aircraft and other platforms—but that they work less well for sectors such as software and digital. Moreover, the imperative to procure things more quickly means that we sometimes need to buy off-the-shelf items, without running a competition, either because we need compatibility with existing systems or because we do not have the time. To address that, we completed a detailed statutory review of the regime in 2022. That proposed a series of reforms in a Command Paper entitled “Defence and Security Industrial Strategy: reform of the Single Source Contract Regulations”, which was published for consultation in April 2022.
The changes made by these amendment regulations are the next stage in implementing the reforms. They will deliver improvements to the regime in three key ways. First, they will increase the flexibility on where the regime can be used, to ensure that more defence contracts can be single sourced without compromising assurance or value for money and fair prices. The amendment regulations introduce a number of alternative ways of pricing a single source defence contract, most significantly by allowing prices to be set with reference to market rates, rather than always having to use the bottom-up default pricing formula. Another example is where existing UK or overseas laws constrain the way in which prices are set, in a way that is inconsistent with the single source regime. In such circumstances, the amendments will allow the disapplication of the pricing formula, to the minimum extent necessary to comply with those other laws.
There are also cases in which it would be useful to disapply the pricing formula to part of a contract, particularly where a contract comes under the regulations significantly after it was signed. This will avoid the need to reopen the pricing of work that may have been completed and paid for years in the past and increase suppliers’ willingness to bring long-running contracts under the regime. The amendments will allow the pricing formula to be applied only to new elements of the contract.
Secondly, the reforms will speed up and simplify the way the regulations work in practice. The legislation currently states that for contracts that fall under the regulations, a single profit rate needs to be applied to the entirety of the contract when it is signed. For some larger single source contracts, it makes commercial sense to use different pricing types for different elements of the contract, meaning a single profit rate might be too high or too low for some elements. These amendment regulations will explicitly allow contracts to be split into different components where it makes sense to do so. They will also simplify the determination of an appropriate profit rate for a contract by reducing the number of steps in the profit rate calculation from six to four. The SSRO funding adjustment will be abolished, and the adjustment made to ensure that profit is only earned on a contract once will be removed from the profit calculation, to be considered as part of the assessment of allowable costs for contracts.
The regime also applies to single source contracts under which the Secretary of State procures goods, works and services for defence purposes. While the meaning of “defence purposes” is usually clear, there are some cross-Government contracts that are used by both the MOD and other Departments. The amendments clearly set out the circumstances under which such contracts will fall under the regime, striking a careful balance between the need to ensure that prices are fair and avoiding unnecessarily extending the scope of the regime.
Finally, the amendments will clarify and generally tidy up the regulations based on the experience of those who use them, removing ambiguities that have come to light and making them generally easier to apply. We have consulted extensively with our suppliers on the policy underpinning the amendments; I thank them for their contributions, which have led to some useful improvements.
Overall, the amendments are designed to make the regulations easier and quicker to apply in practice. To ease their initial implementation, we will be flexible in the application of the reforms, particularly with the first contracts that use them. For example, we will waive many of the reporting requirements on componentised contracts before the beginning of 2025. We will continue to work with industry to address its specific concerns.
Maria Eagle (Garston and Halewood) (Lab)
It is my understanding that the necessary changes in reporting will not come into effect until October, a few months after the rest of the regime, so the Minister has to delay reporting to 2025 anyway, does he not? The law is not going to change until October anyway.
James Cartlidge
The right hon. Lady makes a fair point. We are trying to be flexible in introducing these reforms. The regulations cover some incredibly important defence contracts, from nuclear submarines to procurement for urgent operational requirements and so on, so it is good to have that bedding-in period. I think it makes sense to take this approach.
Finally, I draw the Committee’s attention to the correction slip issued in relation to the draft regulations as they were originally laid. This corrects a minor error—no doubt spotted by all members of the Committee—to a cross-reference in regulation 31(d) in the first draft of the regulations. I hope that Members will join me in supporting the regulations, which I commend to the Committee.
Maria Eagle
It is a pleasure to serve under your chairmanship, Mrs Murray. I am sorry to have caused you a bit of fuss when you arrived in the Committee Room this morning.
I thank the Minister for putting forward the rationale behind what appear on paper to be fairly complicated changes to the single source regulations. The policy objectives set out by the Minister and referred to in the impact assessment seem sensible. The aim to increase the flexibility of the single source regime, making it simpler and quicker to use, seems like a good idea. The aim to increase assurance on value for money is certainly a good idea; as the Minister set out, we are talking about 575 contracts worth £90 billion, and parliamentarians need some assurance on value for money in respect of all that. Anything that seeks to improve and increase assurance on value for money by enabling contracts that currently have to be exempt to be brought under the scheme, and perhaps by introducing better reporting—although we are not dealing with the reporting aspects of the changes today—has to be a good thing. The compartmentalisation will mean that one can get assurance on individual parts of a contract in a way that perhaps is not possible under the current regime. It seems like good idea to aim for these improvements.
However, on reading through the regulations, there seems to be increasing complexity, in addition to their having taken quite a long time to get to this stage. The Minister is the fifth Minister for Defence Procurement in this Parliament and the original consultations on the regulations began in 2019 with his predecessor minus four, as it were, so the Department has been working on this for some time. Does he have anything to say about what appears to be increasing complexity when one of the aims is to try to increase simplicity? Notwithstanding the positive things that might come out of that increased complexity, it seems to me that the regime is more complex. Sometimes, increasing flexibility does mean increasing complexity; those are perhaps two sides of the same coin. I would be interested to hear the Minister say something about how the new regime will tackle the increasing complexity.
Certainly there were concerns expressed by those who responded to the Government’s consultation on the regulations. Although there were only 10 responses, two of them were from industry bodies and so might be thought to represent a broad range of the industry that has to deal with this regime. One was from the Single Source Regulations Office, which—whatever one might say about it—knows its stuff in this regard. Only seven were from supplier companies directly.
On looking at the Government’s response to the consultation, there are a lot of concerns about complexity and lack of clarity, particularly in respect of the new ways of dealing with pricing. The Minister is moving from one pricing mechanism to seven different pricing mechanisms, so that is by definition increasing complexity. If flexibility means one can get better value for money, that is all well and good, but I am slightly concerned about the increasing complexity.
Stakeholders who responded to the consultation asked for greater clarity. They seemed to be asking, “How are these things going to work in practice?” In the Government’s response to the consultation, they rely a lot on the statutory guidance. The response states:
“It is likely that the Statutory Guidance will develop further,”
and that “additional clarity” will be in statutory guidance. It states the same in respect of a number of the concerns raised by consultees. For instance,
“Additional clarity will be provided in the SSRO’s statutory guidance”
and
“any necessary additional clarity on its practical application”
will be
“provided through Statutory Guidance.”
But we do not have the statutory guidance in front of us. Those of us in Parliament who are looking at the regulations and trying to scrutinise them cannot see the statutory guidance or even draft statutory guidance.
It is now 6 March and the Minister has set out that the regulations are going to come into force from April—a mere three weeks from now. I commend him for his ambition. Given that the consultations have been going on since 2019 and there have been three Prime Ministers and five Ministers for Defence Procurement in that time, at least he has got there and produced the regulations, but we cannot see the statutory guidance. Can he tell us when we will see it? I do not blame the Minister personally for this, but there has been a trend during this Parliament, which I think started with some of the Brexit and covid statutory instruments, of parliamentarians being expected to scrutinise things without having all the relevant documentation—in this case, the statutory guidance, which will be a big part of how well this regime works—to hand, or without its having even been written.
Certainly, given the Government’s response to the consultation, it seems likely that the statutory guidance will be heavily relied upon by those trying to use these regulations on both sides, in the Department and in industry, to understand how these concepts are to be applied. I would be interested to know when we will see the statutory guidance. I see references in the explanatory memorandum and the impact assessment to the SSRO hoping to produce it in parallel with these regulations going through Parliament, but that really is not satisfactory for those parliamentarians seeking to scrutinise the regulations to see whether they will work or whether, to begin with, there will be a big problem in implementing these proposals and the rules within them. I do not blame the Minister personally for that, but it is undesirable that we do not have sight of the statutory guidance, at least in draft form.
I accept that the impact assessment suggests that on average there were only around 60 qualifying defence contracts between 2016-17 and 2022-23, and that 10 qualifying subcontracts a year made use of the regulations. However, as the Minister said in his opening remarks, we are talking about £90 billion, 575 contracts and 50% of the Department’s spend, so it is important from a value for money point of view that the Department and the Minister get this right. Can he say any more about how much of the Department’s spend and how many contracts he now expects to come under these regulations, given that they are being made more flexible? The impact assessment suggests that the number will be very small—it kind of assumes that there will be only 10 extra—but is that realistic, given that the aims of the regulations are to increase flexibility and make things easier to use, to get rid of some exemptions and to increase compartmentalisation in a way that ought to bring more potential contracts under these regulations? I would like to hear a little more about what the Minister expects the impact of these changes will be.
The SSRO has a statutory obligation to review these things over time. It has done so since it was established, and there have been previous changes to the regulations as a consequence of those reviews. I think this is the third review, and I know that the implementation is to be reviewed through to 2027, so whoever might form the next Government will have to deal with the consequences and the outcome of all this. However, I would say that the changes to the regulations that the Minister has put forward are the most extensive since they were introduced. Does he agree with that?
Does the Minister think that everything will be ready by 1 April? Does he anticipate any confusion, which might cause its own problems, when the new regime is introduced but people do not have statutory guidance and do not really know how to operate it, and are concerned about which pricing arrangement to use? Does he expect a blockage to start with? Changes to the reporting obligations will not even be legislated for until October, so will sufficient reporting mechanisms be available to parliamentarians and the general public, as taxpayers whose money is being used in these contracts, to assure themselves of the value for money of any contracts that might be signed between April and October?
Having read all this, I think the SSRO will have a bigger job to do than it does currently. There are more references to it arbitrating disputes as a consequence of these regulations, and obviously it has to continue doing the job it has been doing. Does the Minister anticipate any extra pressure on the SSRO as a result of the changes in these regulations? Will it be able to cope with the extra burdens that they will put on it? Is it to have extra resource, either monetary or in the form of personnel, to enable it to do so?
I wonder why, having taken two years to consult—that is a positive interpretation; it is two years since publication of the consultation document, but perhaps four years since some of the consultation started—the Minister is rushing to implement the regulations by 1 April, without the statutory guidance having appeared. He is a man in a rush. I noticed that in the House last week, when he set out his integrated procurement model in respect of the other procurement that the Department does. He is introducing that in April, too. Is he sure that his Department and the officials who have to implement all this will be capable of making these big changes to single source procurement and introducing his new integrated procurement model at the same time?
The last thing that I want to raise with the Minister is the idea of sharing inflation risk, which has not been in the regulations previously. It is interesting that he has acknowledged that it can sometimes make commercial sense for the MOD to share inflation risk, whereas in the past it has generally sought to pass it all on to its suppliers and contractors. Under the current regime, have any contracts been delayed or, indeed, not placed because they have become unaffordable in the 18 months or so since the right hon. Member for South West Norfolk (Elizabeth Truss) crashed the economy and sent inflation through the roof? I wonder whether the situation changed as a result of our suddenly getting a lot of inflation and the Minister was therefore encountering problems under the current regime, or whether it just led him intellectually to think, “In these circumstances, perhaps we ought to have such arrangements.” I would be interested to hear what prompted the change.
Having made all those points, I do not intend to divide the Committee. The underlying aims of the regulations are good, but I hope the Minister understands that there are some questions about them. I hope he will be able to reassure us about the practical implications of implementing them in the way and at the speed that he has set out—starting from April, in the absence of the statutory guidance—and that he has satisfied himself fully that it will go smoothly.
James Cartlidge
Thank you, Mrs Murray. My apologies—I have not done one of these Committees for quite a while, because there do not tend to be too many relating to the MOD, so I had forgotten the form.
I am grateful to the right hon. Member for Garston and Halewood, who asked some very good questions. I am more than happy to provide clarification. First, she asked a perfectly valid question about the balance between complexity and flexibility. In such cases I think one should always use a metaphor or a happy comparison. My first ever Adjournment debate as an MP was on part-time season tickets. That was before the pandemic, and I would argue personally that they have now become quite popular. One could argue that we should have a single rail ticket all around the country, but I do not think it would work in practice. The flexibility is a choice, and I think it is welcome to many people, with off-peak tickets and so on. I think that applies here, too. We could try to have a completely uniform regime, but it is a complex business; these contracts cover areas of procurement that are mind-bogglingly complicated, such as nuclear submarines and all the ancillary items that come with them through the supply chain. However, the right hon. Lady makes a fair point.
On the statutory guidance, let me placate the right hon. Lady. Again, she asked a very fair question; we are talking about parliamentary accountability, after all. Draft statutory guidance has been shared extensively with industry, and the formal statutory guidance will be published in four weeks’ time.
Maria Eagle
Given that the Minister has shared it with industry, might it not have been an idea to share it with the Committee, so that we could determine whether we are relatively happy with it?
James Cartlidge
That is a fair point, which I will reflect on. I shall ensure that the right hon. Lady and all colleagues on the Committee receive copies of the draft guidance as soon as possible, but to be clear, we think that this approach to statutory guidance is a fair one. On a subject of such complexity, if we did not do this, the legislation itself would have to be far more complicated in terms of definitions to ensure clarity for industry, which after all has to implement these relatively complex contracts.
There were some good questions about the SSRO. I have had lots of engagement with the office, which is a highly competent and focused, very professional, relatively small organisation compared with some of those we have in the MOD. It does excellent work and we are always engaging with it on what more we can do together, because this is such an important area. As the right hon. Lady rightly said, arguably it covers 50% of equipment spend and contracts. There is a good reason for that, given the monetary value of some of the big submarine or ship builds. As for resources, the SSRO has made some efficiency savings and has an efficiency target, which I have discussed with it. Those have enabled the office to absorb some extra pressure, which is the best way to deal with it without having to have recourse to further injections of funding. Obviously, we always keep that under review.
The right hon. Lady asked about value for money. Frankly, we could spend all day talking about that, but as we have the Budget later and that will be the theme today, I will not detain colleagues long. I just make the point that the single source procurement regime exists to protect sovereign capability, but that is not its only role. For example, we may be purchasing something at very short notice and there is only one supplier. If we were to competitively let contracts in very sensitive areas, such as nuclear or some of our key naval contracts, there is of course a risk that they would be won by a company that we did not want to win them, so there is no point starting the process in the first place. I think there is a broad consensus on that point. That is why the regime exists and why it has become much more relevant.
The right hon. Lady made some interesting comments about speed, implying that I am a man in a hurry, but I seem to recall that when responding to my statement on acquisition reform she said that we were not going fast enough. We appear to be seeing one of those Leader of the Opposition-style flip-flopping processes under way, which is rather confusing to behold. She did ask a fair question, though: how does this reform fit in with wider reform of procurement? As I announced the other day, our new integrated procurement model is all about the threat we face as a country. We need to procure more quickly, because our competitors in military terms are moving at a frightening pace on some quite extraordinary capabilities that will pose a threat to the United Kingdom.
The purpose of our reforms is to ensure that we have the most effective procurement model, but this will never be completely straightforward, simple or swift; it is a highly complex area of procurement. Were we to undermine the single source regime and make it unfit for purpose, fewer companies would come forward and we would reduce the potentially available supply even further, not only from the big primes but right through the supply chain.
I engage constantly with industry. I had a small and medium-sized enterprise forum in Rosyth last week with Scottish SMEs. The week before I had one of our first engagements with industry at “Secret” in MOD Main Building. For me, that is a critical example of the new system. What it means is that industry is in the room, hearing military secrets of the most sensitive kind—obviously subject to the usual security, which we follow as closely as possible on this side of Europe—ensuring that firms understand what is coming down the track, what our plans are and what the likely security requirements are. That is moving much more quickly than before.
We talk about a three-week implementation time. At the moment, we have got companies in Ukraine that are spiralling capability within days. In that sort of context and with the need for speed because of the military scenario, we should not be afraid of acting swiftly. It is in the national interest.
I take on board the points that the right hon. Lady made. We want to make the regulations effective because they cover arguably the most critical procurements this country makes, in relation particularly to the deterrent, so I am grateful for her support.
Defence Acquisition Reform
Maria Eagle Excerpts(9 months ago)
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Maria Eagle (Garston and Halewood) (Lab)
Let me begin by thanking the Minister for his statement and for early sight of it.
Defence procurement matters. It provides the vital kit that our forces need to fight, as well as supporting hundreds of thousands of UK jobs. We need to get this right as a nation, both for our national security and for economic growth. However, defence procurement is a mess. It needs deep and major reform. The Public Accounts Committee describes it as
“broken and repeatedly wasting taxpayers’ money.”
It has been a mess for the last 14 years. Since 2010, the Conservatives have wasted £15 billion of taxpayers’ money through mismanagement of defence procurement programmes; £5 billion has been wasted in this Parliament alone. With 46 of 52 major projects not on time or on budget, this Government are failing British forces and British taxpayers.
Time and again, this Government have been criticised for poor performance on defence procurement. There have been 17 National Audit Office reports on procurement in the MOD since 2019, four reports by the Defence Committee and eight reports by the Public Accounts Committee. They have all been critical—some highly critical—of this Government. It is right that the Minister proposes some changes—we welcome that. He mentioned Ajax; can he explain how his proposals would have stopped the disasters of the Ajax procurement? That was supposed to see vehicles in service in 2017, but now they will not be on operational deployment until 2026. More than £4 billion has been spent, but just 44 vehicles have been delivered to date. That is 70% of the budget spent for 7% of the vehicles ordered. That cannot be described as good value for money.
The MOD’s Command Paper refresh, which sets out the policy for acquisition reform, does not even tackling waste or value for money, so how would the Minister’s proposed changes stop what happened to the E-7 Wedgetail procurement? That programme, vital to enabling the UK to meet our NATO commitments, was cut from five planes to three by a ministerial decision to save money, but the changes mean that the RAF gets only 60% of the capability it wants while paying 90% of the original price. The Minister mentioned Morpheus. How would his proposals stop cost overruns, such as those that occurred in the Morpheus communication system procurement? That £395 million contract, awarded in 2017, was cancelled just before Christmas having delivered nothing at a cost of £690 million. It leaves our forces in the field having to use the ageing Bowman system for another decade.
As the Minister said in his statement, he has just announced the invitation to negotiate on the new medium helicopter. It has taken him since September 2022, when that announcement was first expected, and three subsequent delays to get the announcement finally made. Why has it taken so long and how will his integrated procurement model prevent delay after delay to expected invitations to negotiate? He expects the contract to be signed in 2025. Does it really take three years to invite negotiations and write contract specifications? Will his new integrated procurement model speed that up, or will it slow things down at the front end?
How does the Minister’s announcement today tackle the waste, poor value for money and delays that appear endemic in the current MOD procurement system? He says the new integrated procurement model will be implemented this year in respect of new procurements, but when does he actually expect to see better value and faster, less wasteful procurements? He talks about procurement anchored in pan-defence affordability, but his 10-year equipment plan is already £17 billion over budget. What adjustments will be made on that?
The long-standing failures on procurement in the MOD matter in an increasingly dangerous world. They send a message, just as over the past 14 years the Government’s hollowing out of our armed forces, creating a recruitment crisis and shrinking the Army to its smallest size since the Napoleonic era, send signals to our adversaries. Labour believes that defence procurement can strengthen UK sovereignty, security and economic growth. Defence procurement reform will be a top priority for a Labour Government to ensure that our troops have the kit they need to fight and to fulfil our NATO obligations.
James Cartlidge
I am grateful to the right hon. Lady for her comments. Some issues are above party politics and playing politics, especially when we look at the threat we face and our need for more competitive military procurement, but she is aware, for all she said, that we have seen a one-year reduction in procurement time from December 2020 to December 2022. There have been extraordinary efforts in DE&S in particular to get equipment into Ukraine. We should never understate the way we have gifted our own stocks and scoured the world to find an enormous amount of munitions, not least 300,000 artillery shells. That is very positive procurement and in the hour of need as far as Ukraine is concerned.
The right hon. Lady asked a perfectly fair question. Obviously, we cannot say how any of the measures would have worked in the past, but let me take one of her hypothetical questions: how would Ajax—the key example, given the Sheldon report—have been helped? I can only speculate, but the emphasis on exportability, for example, will be robust and from the start of programmes. That applies more pressure where requirements are overly exquisite, because it will be balanced out by international demand. The reason we want to promote exportability is ultimately to strengthen the resilience of our industrial base. Our market is not big enough. If we have that check in place, it will reduce the tendency towards the exquisite.
Secondly, we will have a new set-up in terms of the expert advice we receive at the beginning—the second opinion, as I call it—in particular from scientists at the Defence Science and Technology Laboratory, export experts at the Department for Business and Trade, and our own civil servants on finance and so on. We will have very clear advice, which will look at the technical issues around potential platforms. At the moment, to be frank—I appreciate this is only possible to say from internal knowledge—we do not get that level of balance and challenge against the primary requirement coming forward from the frontline command.
The right hon. Lady asked how the new model would apply to the new medium helicopter and whether it would add time at the beginning. I cannot comment on the specifics of NMH, because it is commercially sensitive, but talking in generality, I would trade more time at the beginning, thrashing out the big issues, working out and locking down the policy on, for example, industrial production, so that those issues do not find themselves being reopened later. Of course, I am talking generically and not about specific programmes, but if such things are not locked down, there is a real habit of them coming back later and creating the biggest delay, putting the programme in question. So, that is crucial.
Finally, the right hon. Lady asks about the affordability issue in the equipment plan, which I think is the most important part. I spoke about the munitions strategy. We could simply ask the single services to come forward with their priorities for new munitions, but the best way is to look robustly at the threat we face. That is the most important issue: to work back from that and prioritise at a pan-defence level the most urgent requirements for new munitions. I think many people would think that that is common sense, but it has not necessarily been how the system has worked.
Let me finish by saying that perhaps the most positive experience I have had as the Minister for Defence Procurement was visiting one of our small and medium-sized enterprises, which was bringing forward a drone we were using in Ukraine. It was receiving data from the frontline and, based on that data, spirally developing the platform within days to go back into service so it was competitive against the threat it was facing. I want to create a constant loop between industry and the MOD, where we are sharing data and frontline knowledge, so that we have a far more rapid period of technological innovation. The equipment plan, which was very static over 10 years, will look like an old fashioned way of doing things. The priority is to get technology into the hands of the military. That will increasingly be on the software basis and that is how we strengthen our armed forces overall.
Oral Answers to Questions
Maria Eagle Excerpts(9 months, 1 week ago)
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Maria Eagle (Garston and Halewood) (Lab)
The Government have delayed producing the information required for the invitation to negotiate for the new medium-lift helicopter four times since September 2022. Can the Minister explain what has caused this 18-month delay? Given the reports last week about his Department freezing capital spending until at least the new financial year, when will the Government get their act together to get this competition under way? Can he promise that the delay will not push back the delivery date for this vital capability for our forces?
James Cartlidge
I am pleased to say two things to the hon. Lady. First, we will have the announcement on the next stage of the new medium helicopter very soon. I am also pleased to confirm that we have been clear on our spending position. To echo my right hon. Friend the Minister for Defence People and Families, if the hon. Lady wants to talk about stuff that is rumoured in the press—we do not have those sorts of capital spending controls—can she confirm whether the shadow Chancellor will honour our defence spending commitments?
Oral Answers to Questions
Maria Eagle Excerpts(10 months, 3 weeks ago)
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Maria Eagle (Garston and Halewood) (Lab)
Let me make clear that AUKUS pillar 1 and pillar 2 have Labour’s full backing. However, we are concerned about whether the Government’s current focus on implementing AUKUS is sufficient and we want more UK leadership for this national endeavour. The latest list of ministerial responsibilities, from October 2023, does not even mention AUKUS or Australia, although it does mention the USA. Ministers have agreed that pillar 1 should have only a part-time official responsible for its implementation. If AUKUS is not even in his job description and his officials are working on it part time, how can we take the Minister seriously when he says it is important?
James Cartlidge
The way we take it seriously is not by judging the number of officials or what we are doing in that regard, but by looking at what we are actually delivering in the real world in terms of military capability and for British industry. As I just said, the US has reformed ITAR and there are thousands of jobs across the UK, boosting our Indo-Pacific capabilities. This is an extremely important project. We are making huge progress and the Government are very proud of the partnership.
Oral Answers to Questions
Maria Eagle Excerpts(1 year ago)
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Maria Eagle (Garston and Halewood) (Lab)
May I confirm again that Labour’s support for our nuclear deterrent, which we maintain on behalf of our NATO allies, is total? However, following reports in newspapers about a malfunctioning depth gauge on a Vanguard submarine at sea, can the Minister explain what steps he has taken to ensure that such an incident never happens again?
James Cartlidge
First, I am delighted to hear confirmation of Labour’s total support for the deterrent. That sends a very powerful message to our adversaries about our national endeavour to support the deterrent and its renewal. On the specific story that the hon. Lady mentions, she will not be surprised to hear that we do not comment on operational matters in respect of our submarines.